Regulatory: The President blinks

On Sept. 2, President Obama rejected a draft rule submitted by the Environmental Protection Agency to toughen the National Ambient Air Quality Standard (NAAQS) limiting ozone emissions. This decision is one of the Administration’s most significant regulatory actions, and the outcome will have substantial consequences. The ozone rule had been a major target of Republican criticism. The President’s preemptive concession in withdrawing the rule will encourage his opponents to continue seeking to roll back other environmental rules during the deficit reduction process.

On Aug. 29, House Republicans targeted 10 “job-destroying regulations” for repeal, including a number of EPA rules:

The ozone NAAQS revision, which was characterized as “possibly the most harmful” of the challenged rules because of its adverse effects on construction and industrial development

The forthcoming Coal Ash rule establishing the required level of treatment for incineration residues at coal-fired power plants

The regulatory reform battle essentially centers on air pollution issues, especially those that involve coal-fired power plants and thus the cost of electricity.

Four days after the Republican announcement, the President unilaterally pulled back the rule with the largest impact, the ozone NAAQS, without seeking any compensating concession. The first rule of legislative negotiation is, if you are going to make a concession, make it at the very end of the process, but only if saying “yes” will produce an absolute resolution of the matter with no possibility of demands for further changes. The President violated these principles and will continue to face demands for further rollbacks of clean air rules.

The provision of the 1970 Clean Air Act under which NAAQSs are established has great symbolic significance for the environmental movement. It provides that NAAQS must be issued on the basis of scientific and health considerations alone, and explicitly prohibits EPA from considering their costs. This law represents the legislative high point of environmental concerns in Congress, and its wisdom has been bitterly contested for the last 40 years. The White House press release justifying the President’s action suggested that the rejection was based on the rule’s potential adverse effects on the economy during the recession. It is hard to imagine a greater blow to the morale of environmentalists than this retreat on NAAQS, or a step better designed to persuade Republicans that they have won the battle of ideas about the adverse effects of regulation.

Rather than reaching closure on regulatory rollback efforts, the Obama Administration’s action will encourage House Republicans to keep pushing. The most informed analysis of energy and environmental issues, published by Clear View Energy Partners, concludes that the Utility MACT, limiting emissions of mercury and other hazardous air pollutants, is “the White House environmental policy bedrock” on which it will not yield, but that other important rules, including the Cross-State Air Pollution rule,are in flux.

The focus of policy development has now shifted to the efforts of the Joint Select Committee on Deficit Reduction to develop a compromise bill to avoid automatic, untargeted budget cuts. Careful attention will be paid to statements by its Democratic members for hints that they might be willing to consider further regulatory changes.